Federal spending funneled to Colorado as a result of the state joining the Medicaid expansion would boost jobs by 22,000 and produce $4.4 billion in new economic activity, according to a new economic analysis.

The U.S. government would pick up 100 percent of the cost early in the health insurance expansion, rather than the usual 50/50 split with states, and the spending is projected to pump up average household earnings by $608 by 2026, said a study commissioned by the Colorado Health Foundation.

The foundation and other Medicaid backers favor Colorado joining the expansion because of greater access to health care. They also argue it would cost the state less than declining the expansion.

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In addition to paying for 253,000 new Medicaid insured by 2026, the federally-financed expansion will shift other state health costs such as prisoner care to the national budget, the study said. It was conducted for the foundation by former Legislative Council director Charlie Brown and other analysts.

The expansion, part of the 2010 Affordable Care Act, is to be paid for in billions of dollars in new taxes on medical equipment, high-end insurance policies and other services.

Critics oppose the taxes as a drag on the economy, and say health inflation and entitlements will overwhelm new revenue.

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"Once again people are asked to believe that taking money from private citizens to fund an expansion of federal spending produces more jobs and income than if the private citizens got to keep and spend their own money," said Linda Gorman, a health policy analyst with the libertarian-conservative Independence Institute. Models of tax impact on consumer plans shows "taking money from the private sector and giving it to the public sector reduces future output," Gorman said.

The study estimated new jobs at hospitals and clinics treating the formerly uninsured, at medical suppliers, home health agencies and other peripheral industries. The new economic activity is expected to generate $128 million more in state tax revenue in 2026 than would exist without the expansion, the study said.

"The purpose of the Act was to insure folks, and it happens to have a stimulus effect," said Phyllis Resnick, a consultant on the report.

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